Will the Dollar Decline Continue?

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1:30hi everyone the dollar decline continue welcome to the real vision daily briefing with me today is dale pinkert training coach at trade gate hub hi dale how are you great to be with you maggie that startled me i didn't even know where that was coming from he's getting some return back It's great to see you. I will have to start playing my own music soon. Well, Dale, maybe this universe knew you were joining us with your dulcet tones. Could be, Maggie. We'll see what happens by the end of the show. We'll see what happens. For those of you who know, sometimes Dale breaks into song if we get him in the right mood.

2:06I can't stop myself sometimes. I love that. Well, we got to talk about the markets first. So we have stocks, U.S. stocks down slightly. They just closed. bond yields up, the dollar bid a little bit ahead of the Fed meeting. But you can kind of feel we're in this holding pattern as everyone kind of waits for that big event. We've also got earnings and a big jobs report. So it's going to be a busy week. What are you watching as we wait for J-PAL and gang? Yeah, I feel like we're in the eye of a hurricane. And we're going to come out of it this week with everything you just mentioned. And part of that hurricane, I think, is going to be that the market has mispriced that we're going to be easing later in the year.

2:49And there are offsides with that. You could take a look at bond action today. Sentiment is quarter and pause. So we're going to see, in fact, the pause makes me think about that clip that you and I, that you're going to show during the show. And pause, according to, what's the gentleman's name? Warren Mosler. Okay. It could be risk off. It could be all the stimulus from higher rates if that goes away. That could be a reason why asset prices sell off. But I'm thinking that the worst is going to be maybe 3 % in the 10-year. And I don't even know if that's going to happen after today's action. But I think we'll be looking at new highs in the 10-year yield.

3:45And now the bonds look like they're on the verge of breaking down. So, you know, that part of the market, I think people have mispriced that there's going to be easing later. And I think that's going to have an effect when people come to terms with it of terminating this dollar weakness for a while and setting up dollar longs, euro shorts, cable shorts. Interesting. Okay, so we're going to play that clip in a minute because it is very contrarian and very interesting so everyone can follow what we're saying. But if we take that out of the equation for a second, you're saying maybe the market got overambitious or overestimating the amount of pausing or easing.

4:32Because of SVB. Ah, okay. So that's when they started pricing in cuts later in the year, okay, that the Fed was going to ease. I think the market's wrong-footed on that. I think the Fed could pause and could just keep things where they are, see how they play out. But there's nothing that I see in long-term T-note yields or long-term TLT that tells me that I want to be on the long side of bonds and bet that rates are not going to go up. I thought there was a chance of that last month when TLT was knocking its head at Oregon against the 109 resistance. It was never able to break out. And now we're on the verge of breaking down with TLT trading 103, 102.

5:26And, you know, it looks like we could have a waterfall in bonds. So that makes me think about all the banks that are just like SVB, that have been long bonds for over a year, and that their cash position, their financial positions are compromised because, you know, there's always more than one cockroach, Maggie. Sadly, that is true. That is, for anybody who's lived in city apartments, that is true. You need to panic when you see one. So it's very interesting, Dale, because a couple of things today. First of all, we had ISM manufacturing index out, and it did show another month under 50, which indicates contraction.

6:09But some of those underlying components were not as slow as some had expected, and it was employment and prices paid. Add that to the PCE that was a little stronger last week. The data is not really moving in that direction. And we did see JP Morgan come in, take over SVB. SVB now granted, you know, Jamie, we're not, this has a long way to play out, but Jamie Diamond sort of saying this part of the crisis, he feels like it's over. We can have another discussion about credit. So some of the things that were being baked into that they're going to ease scenario don't seem to be present at the moment.

6:48What do you think that we're going to get that reaction when Jay Powell, do you think they're going to want to send that message at the press conference? Or are they going to try to sort of prepare the market gently? I don't know. I say lie to me. Tell me everything is okay. Yeah. Johnny Lang. Anyway, that's, you know, that's how I look at what the doublespeak that comes out and the flip-flops that come out. And, you know, a lot of people are big fans of Jerome Powell. And, you know, I don't have anything against Paul. I just think that this is beyond anyone's bailiwick to try and manage the situation that we're currently in.

7:37So, you know, I don't have confidence that the Fed is going to, you know, soft landings. I don't think so. So we'll see. So we had an interesting deep dive episode today. I spoke with Warren Mosler. This is what Dale was referencing a moment ago. He's one of the thought leaders, for those of you who don't know him, one of the thought leaders of what's become known as modern monetary theory, MMT. We invited him on because so many of you asked us to. And he made the very interesting argument that the Fed rate hikes are actually stimulating the economy. They are not slowing it down. Have a listen to what he said, and we'll talk on the other side.

8:21With debt to GDP this high, we are just going on a wild spending spree of deficit spending every time the Fed raises rates. When the Fed raises rates, that's what they're doing. They're causing the public debt to go up. They're causing the deficit to go up. And right now, the deficit spending is something like 7 % of GDP. That's a very high deficit. It had gotten up to 15 % for COVID, which was like World War II, it was very high. But then it collapsed. As soon as people went back to work, they stopped collecting unemployment insurance. We had all these counter-cyclical reasons why it all came down.

8:58So it was one-time things that went away. And it had gotten down to 3 % or 4%. and the economy was collapsing. We had two negative quarters a year ago. And then the Fed started raising rates because of the inflation and the deficit started going back up. And right now, I think the interest expense is substantially higher than the military budget, which also went up, by the way, which is almost 900 billion. I think the annual rate of deficit spending on interest, when you include the amount the Fed's paying, is up to 1.2 trillion. Now, if we left rates at zero, It would have been on the way to zero.

9:33Instead, it's$1.2 trillion in climbing. And it accounts for something like half of the deficit spending. And they're going to be raising rates again, and that's going to add to the deficit spending. And that adds to demand. It adds directly to people's income, to your savings, your financial assets, and supports the economy. Deficit spending always supports the economy. So they're raising rates. Yes. It's juicing the economy. Right. They're like drilling holes in the boat to let the water out. something like that. I'm trying to come up with the right analogy. Yeah, the right analogy. Throwing kerosene on the fire.

10:09And that full interview is available on our website. It's really fascinating. It's in some ways very contrarian, although when you listen to him reason it out, it's very interesting. He also talked about the debt ceiling. He thinks of some really underappreciated risks there. So I encourage everyone to go check it out. If you do not have a membership, then scan that QR code and you can figure out how you can access it or jump on one of the trials that we have. Really, really worth listening to, and especially in wake of the entire policy response to COVID, which was in essence MMT. It's really interesting to hear his thoughts.

10:48So, Dale, we've got a lot of questions. I think I want to just jump into a couple based on what you were talking about. Someone asking, TrillionX asking, do you think the 10-year could be above 5 % this year? That would mean the curve is, I don't know if he's saying inverting with the long-term yield rising, not short-term yield declining. Deinverting, I think he's saying. I don't know if that's actually a word, TrillionX. That's not inverting. That's the other way. Deinverting. I think is what he's saying, but I don't think that's exactly what he's meant to say. But what are your thoughts? Is that possible?

11:24Do you see it going back up above 5 %? I'm thinking 4.8, 4.9. I mean, it's close enough for government work. I think it's a possibility by year end, yes. Which is certainly not what the forecast is right now. So that's a big adjustment to make. So they'll be playing with their dot plots. They'll be using some invisible ink or whiteout and move them around. And this is going to be interesting because we have seen in the past that these press conferences really have the ability to move the market depending on how much they want to say or how much they want to shift market expectations. And if, Maggie, the clip that you just played, if his thesis is accurate and the Fed is one and done, that means some of the stimulus from higher rates goes away, according to his theory.

12:20Yeah, well, that exactly. Because if you believe that on the one side, the flip is that if they start to ease, you have the opposite effect. Maybe just pausing would be enough. Yeah, it gets complicated. Hey, everyone, we're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

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13:45We were talking about the, you mentioned the dollar. So I started out by saying, is the dollar decline going to continue? And some of our viewers were like, oh, not the doom. I I meant from a trading perspective, not the bigger existential picture of the dollar's function as a reserve currency. I mean, I know pros that are really buying into the de-dollarization story. And they might be right long term. But this is such a crowded trade. And, you know, the shoeshine boy is asking me for a euro instead of a dollar. That's a time not to be, you know, going all in against the dollar. If you look at the chart, there's some technical areas.

14:27You have a weekly moving average there, right around 112. That's also about 61.8 back from the entire decline. And with the sentiment and all the news background about the end of the dollar, it's just about the time for us to have a turn. And I think euro could trade back towards parity. Really? into the fall. Again, not something a lot of people are talking about. Okay, good. Because I'd be reversing out if you told me everyone agreed with me. Spoken like a true trader. When everyone's talking about it, it's definitely not going to happen. Love to be alone in the market. You're also looking at, well, actually, I know there's a question someplace.

15:18I've got two different things open, so I'm not sure it was. But someone asking, Robert asking, wondering what you think about US dollar yen? Dollar yen. I'm looking, you know, if you follow my work, started liking it around 130. We crossed some moving averages today. I've been talking 140 handles, maybe 143, which also correlates with higher yields, at least until then. So I still think there's more left in the yen. I buy hard breaks. And you're wrong on back under last week's low, 133 would change a picture. But it still looks pretty bullish to me, up to 143. And then that could be a tremendous short after that.

16:05Are you watching the BOJ at all? There was a lot of talk earlier about the new governor of the Bank of Japan and would they change their policy toward yield curve control. Are you watching any of that? Is that influencing anything that you're thinking about on that cross? Lie to me. Tell me everything is okay. So that's how much I pay attention to the central bank rhetoric. I watch what they do, not what they say. And obviously, this new BOJ president is towing the line. And I have no idea. I would probably say at 143, I'll use the markets to guide me of when the BOJ might start to change its tune and be considering yield control.

16:58But not until I see like about 143 in the end. because then I think there could be a tremendous decline from there. But it has too much momentum, structurally looks good, and a lot of people are still trying to short it. A really good question coming in from – we've got two questions on bonds, but I like this question from Jay. How do you know and find out what the market is pricing in in regards to future rate hikes? Is there a chart or a bond price benchmark? Thanks, Jay. Okay, Jay. You know, I'm a pure technical guy, and my rate forecasts are based on the action that I'm seeing in the charts.

17:46I don't go out and look for people's forecasts or dot plots. To me, price action can give you the answers of what you're looking for in the future. As a trader, we actually live in the future. We're not taking positions based upon what we think is going to happen today or tomorrow. Like Retsky, we're skating to where the puck will be, not to where the puck is. So I think if you become a good chartist, you won't have to rely on that kind of input and just make price king, and it'll serve you. So what kind of chart should you look at? Are you looking at treasuries? Is it Fed Fund futures? TLT and 10-year yield charts are the two that I mainly pay attention to.

18:34TLT being a proxy for longer-term paper, 20-year about in the TLT, Treasuries. I also pay attention to junk, HYG, LQD. Look to see if there's any stress when HYG may be performing worse than LQD or the treasuries, but the treasuries won today big time on percentage decline compared to those. So it's almost like we're going into this debt crisis with the most polarized, and you and I talked about this last time, Congress ever. I think there are – it's not going to be settled soon. But I've also heard an argument that the most embarrassing for the market would be for it to be raised and settled.

19:28Because then the Treasury could go out and start selling more notes and bonds, and that would drain the liquidity away from what's finding its way into the markets. Ah, interesting. So there's another, you know, contrarian view. You would think it would be the crisis of not getting the debt deal done, which would be the problem for the markets. But it's actually resolving it and raising the debt ceiling. And then liquidity drains away from the economy and everything to fund our government through the sale of treasuries. So interesting. So for those of you who follow Andreas's work, he's been covering that specific issue in Steno signals pretty regularly.

20:17And it can be complex, but he really breaks it down and makes it understandable. I'm so glad you mentioned that, Dale, because I just found out he's doing it live. He does them live now at 11 Eastern time tomorrow. And the subject is liquidity. And I have a feeling he's going to touch on that exact point, Dale. And he's telling us that the subject will be liquidity will soon run drier than a martini. There you go. And people are talking about some monitoring measures, Maggie, M2, M1, that have really just fallen off Niagara Falls. Big contractions of money supply. It's not stimulative. and there's no velocity.

21:03It's a problem. That's really important. Again, if it feels like this is going over a little bit, it is a little complex, but just watch one of Andreas' explainers. And then if you have questions, wheel up with them because they'll answer them and try to sort of help you make sense of it because it's been a really interesting dynamic. So gold, that was one of the charts you sent. And we have some questions about that too. How does gold perform in this environment? Well, if you put up the chart, I was last year, April 4th, and you asked me, Dale, when do you think the correction would start? And every once in a while, I exude maybe too much confidence, but I had conviction.

21:45And I said, today, right here. And I put a little notation of where it was and the market dipped. And then it was about 20, 28 that day dipped and then made one more high, another$10,$15. I would love to see the dollar sell off one more time to be able to short gold. The big area to me now, and I'm negative gold because obviously I'm looking for a dollar rally. I'd love to see the dollar make new lows and gold not. That would be a nice market tell. But I think we're headed at least to that 1930 level. That's a major breakout level from a long-term downtrend. And if we get under 1930, and I think that's viable, we could revisit and take a round trip back towards 1800 again.

22:43And it's funny because we still have plenty of people who come on who feel bullish about gold. So I feel like it's another one of those trades that's not maybe priced in the market fully. Well, you know, a lot of people that come on that are bulls in gold, they're bulls on gold forever. Right. Or maybe not forever, but they don't give people tactical ideas. And if you just have a bias and you buy something whenever, you know, market drawdowns can knock you out and then you're not there to participate in the market. So, you know, long term, I like gold. I think there might be another opportunity to load up around 1800 or so.

23:25So, you know, you can't just always say I like gold and then it pulls back 160 like it did a few months ago. No one said they didn't like gold. I liked gold then, but I said there could be a correction. I like gold now, and I think there could be a correction. So be tactical with your narratives. Don't be perma bulls, perma bears. Be able to be open to both sides of the market. and you don't have to trade both sides. If you're a bull, you're just patient. And I'm sure you own some gold, but you don't add up here. You wait for the opportune time to do it. And I think that's going to happen down around that under 1930.

24:10People will come in at 1880, 1860. But I think we could actually trade down to 1800. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

24:29so we're going to go right around the asset classes because one of the i mentioned earlier one of the big uh events that's also happening this week apple reports earnings after the close thursday i believe how are you feeling about that stock uh as we head into that there's some talk some headlines out today that maybe they're going to issue some disappointing forecasts this week Okay. Well, I tried to think of, Maggie, what is the most contrarian trade in the cosmos? Everyone owns Apple, either through their 401ks, their own accounts, money managers. Indexes, yeah. Everyone owns Apple. It's the most crowded trade on the board.

25:15We're only about$10,$15 away from new all-time highs. What else is? Can you name a few stocks that are almost at new all-time highs? Not many. So people think of Apple the way they think of how people used to think of a bond. Yes, I agree. It's a haven. So during SVB, people piled into Apple. I'm starting to get some technical divergences here. I'm buying sub-puts here. Now, I'm doing it with options because you could end up having a great earnings report and it could rip your face off like Microsoft earnings did last week. It looked like it was breaking down and then rallied$20,$30 on earnings.

26:02So that could happen. But actually, I could make a case if we start taking out$156, I have a lot of confluence at$120 Apple. Wow. Some of you noticed we have a... Also... Yeah, that's a big 126. 120. 20? All right. We're at 169 right now. Yeah. All right. So Tim Cook was selling a lot of Apple stock about a month ago. I mean, it's continued higher. So, you know, it doesn't look like anything. But Tim Cook was in India trying to warm up Modi because Tim Cook is worried about China. Somebody was just talking about China being weak on our chat here. Okay. So, you know, China could have an effect on the U.S.

27:01by giving Apple problems. And that's why Tim Cook is looking for different geographic areas to replace China. But it's just going to take too much time. So if China pulls something out of the hat or the earnings are bad, it's crowded in the first place. There are problems with supply chains still because of the fear that we have in China. So I'm taking a shot here with puts at these levels right here, and we'll see what happens. I'm top-picking Apple, the most crowded trade in the cosmos. I love it, Dale. You're throwing them down left and right, these calls today. It's fantastic. You're the contrarian man today.

27:49Do you think that if that were to happen, you think it's a quick trip down there, or is it kind of a grind down? At first, it'll be a grind down, but under that 156 level, that would negate the breakout, and I think things would accelerate under 156. Interesting. Would you be a buyer there if it got down to your low? 120? Yeah. No, because it would have to start proving itself. Actually, its pre-COVID high was 80. Wow. Wow. And a lot of stocks have already retraced to their pre-COVID highs. So that's where Apple's comes in. Wow. That's a lot of food for thought on Apple. No pun intended. And it was not intended.

28:33I just realized when I said it. Semiconductors. Now, this is going to be interesting. This is another area. And you were talking about stocks that have been on fire. Gosh, NVIDIA has got to be right at the top of that list, right? So how are you feeling about semiconductors right now? They're down in the last month, but up, I mean, SMH is what you're looking at. You're looking at the broader, but up 30 % in the last six and change in the last six months. Yeah. So, but that was a pretty good break. I circled it. That's when I was on at the top and turning negative because of that divergence with the lower blue line on the RSI.